If you have paid most or all of your existing mortgage, you may want to consider a capital release plan. Releasing capital can provide you with a large sum of money to spend and at the same time allow you to continue living in your home. It can be particularly useful to cover large expenses later in life, such as long-term care. Releasing capital may be a good idea for seniors who want to earn some extra money during retirement.
Releasing capital can help you make improvements to your home, pay for care costs, help a loved one who is struggling financially, or pay other debts. Releasing equity can provide a useful way for older homeowners to access the equity accumulated on their property. It won’t be right for everyone, but under the right circumstances, the capital release could be used to supplement your pension income or provide a lump sum, all while you live in your home. Capital release schemes regulated by the FCA are a secure way to access some of the capital linked to your property.
This tax-free money can be taken as a lump sum or in installments, and can be used as you wish. Many people consider the release of capital at a later stage of life, but they are not sure if the release of capital is a good thing or not. Of course, capital release has its drawbacks, so you should always talk to your financial advisor before deciding on a capital release plan. Considering the pros and cons of releasing capital and reviewing both the advantages and disadvantages will help you decide whether freeing up capital is the best option for you.
The release of capital is safe because the UK financial market is regulated by the Financial Conduct Authority (FCA). You may want to consider hiring an advisor who is also a member of the Equity Release Council (learn more about the Equity Liberation Council below). If you are over 55 and own your property, equity release can help you unlock money from your home that can be used for many purposes. You should contact a specialist advisor to learn more about the pros and cons of freeing up your home equity.
When weighing which capital release product best suits you, remember that the price your equity would have to repay comes if you have chosen not to make monthly repayments to reduce the debt, so interest is accrued and combined. The interest rates applied to equity release products, such as lifetime mortgages, will generally be higher than what you will pay with a traditional mortgage. Freeing up capital could also be a useful way to help your family and friends financially, allowing you to enjoy watching how they use that money. The capital release is a set of financial products designed to give homeowners over 55 years of age access to the money linked to their property and, at the same time, can live there.
At the same time, freeing up capital is not a good idea if you want to unlock a full lump sum to spend a leisurely expense without considering your financial future. With the capital release, you don’t have to worry about making monthly payments either, as the amount borrowed can be repaid by eventually selling the property after you die or move to a care facility.